What can you do if your existing bank line of credit from a traditional bank is too small to grow your business? Receivables factoring can help. Many times a line of credit is based more on your credit or the value of your assets. Accounts receivable factoring and PO funding, on the other hand, is based on your orders and invoices from and to creditworthy clients.
What is a Line of Credit (LOC)?
A Line of Credit is a credit facility which a financial institution or another commercial funder provides to a business, government, or an individual. The borrowing has a limit which one should not exceed. The borrowing draws down on the account at any time. The advantage with a LOC over a term loan is a borrower who is typically only charged interest on the amount withdrawn at any given time vs. an entire loan amount. A line of credit is a source of funding for a company to help meet its liquidity needs. A LOC is generally for a short-term arrangement. A bank link of credit helps Business owners to use it in emergencies like for meeting payroll.
An Example of Line of Credit
Let’s say you have a $30,000 line of credit, but you have a new client generating $90,000 in new orders. You can’t fund your payroll or raw material purchases with the line you have. ARfunding.org can advance you up to 90% against your invoices. That means you could have up to $81,000 right within 24 hours of your billing!